Top speakers from various CEE countries, among which Ruxandra Pietreanu, have been invited by Fordata to share valuable insights about Mergers&Acquisitions market evolution in 2022.
M&A activity in CEE remains resilient, despite uncertainties generated by the war in Ukraine
Despite the overall downturn in the deal volume in 2022 caused by challenges such as
soaring inflation, broken supply chains, growing energy prices and shortages in raw
materials, some countries, such as Romania, have managed to maintain the upward trend,
claim the authors.
As pointed out in the report, CEE economies, not dissimilar to some of the Western
European countries, may be facing troubles in keeping their businesses afloat in the wake of
the energy crisis, which still is expected to hit the hardest in the upcoming winter season due
to the shortages of gas imported from Russia, as well as the inflation crisis. This may result
in a growth of the number of distressed assets and devaluations.
“Unsurprisingly, spiking power and gas prices, as well as growing interest rates, have been
the biggest concern for businesses, investors and individual recipients. These factors result
in growing commodity prices and wages pressure on one hand, and lower company
valuations on the other, which is dictated by higher demanded return on investment” – write
the report’s authors.
FORDATA: Fundamentals for investments in the CEE are still strong
According to the authors of the report, Central and Eastern Europe is still an attractive
acquisition target, while the challenges the region is currently facing are to be considered as
only temporary.
In relation to the above, investors should “look for resilience and focus on companies/sectors
which would be less affected by the key macro drivers of inflation and energy costs. These
may well be the businesses that benefit from longer term trends, such as digitalization in its
various forms. Identify sectors which are ripe for consolidation. If the economy is not growing, seek opportunities where M&A can drive growth and improve margins” – writes Bogdan
Chirita, Investment Director at V4C, cited in the report.
On the other, as pointed out by Ruxandra Pietreanu, Managing Partner of Path2Capital, “a more cautious approach from PE has been expected, as the natural tendency of these investors is to try to stabilize portfolio companies first, whenever a major negative event happens. Notwithstanding the above, the existing high levels of dry powder is to bolster the PE activity in the region”.
With a large amount of cash still in place ready to be invested in promising enterprises,
especially in the TMT sector, the downturn in the overall volume and the value of deals in
2022 might be a suspension period in the wait for more favorable circumstances, claim the
authors.
The entire report is available for free at FORDATA website (https://fordatagroup.com/cee-expert-report-2h-2022)
